“What happens to a loved one’s bank account when someone dies without a will?” The aftermath of a loved one’s death, especially when it comes to handling their bank accounts, can be challenging.
You may have questions, such as:
- Is it okay to withdraw money from a deceased person’s bank account if I have the ATM card and password?
- What kinds of expenses are okay to withdraw money for (if any)?
- What if the named beneficiary designations give me access?
- Does the bank account go through a probate process?
Understanding the specific steps and rules involving bank accounts after the account holder dies can help you manage the situation more effectively.
Whether it’s dealing with joint bank accounts, designated beneficiaries, or the probate process, knowing what to expect will make a difficult time a bit more manageable.
In North Carolina, the fate of a deceased person’s bank accounts depends on various factors, including the type of account and the presence of any joint account holders or designated beneficiaries.
Understanding the Types of Bank Accounts
Bank accounts come in various forms, such as checking accounts, savings accounts, and joint bank accounts. The rules for handling these accounts after the account holder’s death can differ.
For instance, if the deceased had a joint account with rights of survivorship, the surviving account holder typically has immediate access to the funds. Joint bank account rules prioritize the surviving account owner’s rights.
With a joint bank account with rights of survivorship, the funds in the account automatically transfer to the surviving account holder(s) upon the death of one of the account holders. This means that the surviving joint owner or account beneficiary becomes the sole owner of the account balance.
However, the deceased account holder’s share of the account must address certain conditions and claims. These include:
- Allowance for the surviving spouse
- Funeral expenses of the deceased
- Costs associated with administering the estate
- Claims of the deceased’s creditors
- Governmental rights
If any funds remain after these claims are settled, they belong to the last surviving owner or beneficiary.
The personal representative of the deceased’s estate should include the deceased’s portion of the joint bank account as part of the estate’s assets. This is for the purpose of calculating fees and commissions. However, these funds are generally not used unless there are not enough personal assets to cover the debts.
The Role of Designated Beneficiaries
In some cases, the account holder may have designated beneficiaries through a beneficiary designation form. These forms allow the account holder to specify who should receive the remaining funds in the account upon their death.
Having beneficiaries can simplify the process, as the bank account passes directly to the named beneficiary without going through the probate process.
What Happens to Retirement Accounts, Life Insurance Policies, and Pensions When Someone Dies Without a Will in NC?
When someone passes away without a will in North Carolina, certain assets like retirement accounts, life insurance policies, and pensions may not be subject to the same intestate succession rules that govern other parts of the deceased’s estate.
Here’s how these specific assets are typically handled:
Retirement Accounts
Retirement accounts, such as 401(k) plans and IRAs, often have designated beneficiaries. These beneficiaries are named when the account is set up and can be updated at any time. When the account holder dies, the funds in the retirement account pass directly to the named beneficiaries, bypassing the probate process entirely.
This means that even if someone dies without a will, the beneficiaries listed on the retirement savings account paperwork will inherit the account’s funds.
If there is no designated beneficiary or if the designated beneficiary predeceases the account holder and doesn’t name a contingent beneficiary, the retirement account may then become part of the probate estate. The personal representative then distributes the funds according to North Carolina’s intestate succession laws.
Life Insurance Policies
Life insurance policies work similarly to retirement accounts. The proceeds from a life insurance policy are payable on death, directly to the beneficiaries named in the policy. This process also bypasses probate, allowing for a swift transfer of funds to the beneficiaries.
If there is no named beneficiary, or if the named beneficiary is no longer living and there is no contingent beneficiary, the proceeds may become part of the deceased’s estate and be distributed according to intestate succession rules.
Pensions
Pension plans can vary widely in their terms, but many also allow for the designation of a beneficiary. The death benefits from a pension plan typically go directly to the named beneficiary, avoiding probate.
If no beneficiary is named, the specifics of the pension plan will determine how the benefits are handled. Some plans might pay out the benefits to the deceased’s estate, while others might follow a default line of succession defined by the plan’s terms.
What Happens When The Account Holder Dies Without Beneficiaries?
If the deceased person did not designate any beneficiaries and there is no joint account holder for their bank accounts, the account holder’s bank account will become part of the deceased’s estate.
This means the individual account funds will generally go through the probate court. Probate is often a lengthy and complex legal process. Probate courts oversee the distribution of the bank account funds according to state laws and the state’s estate administration process.
The Probate Process in NC
The probate process in North Carolina involves several steps, starting with the appointment of an executor (if the will names one). If there is no last will, the court will appoint an administrator.
In either case, this individual is the “personal representative.” They have the legal authority to manage the deceased person’s bank accounts and other assets.
Before settling an estate, the personal representative provides a certified copy of the death certificate and follows the legal process to access and distribute the bank account funds.
Intestate Law in North Carolina
When someone passes away without a will in North Carolina, their estate is distributed according to intestate succession laws. These laws ensure that your assets pass on to your closest relatives, but the process can be complex.
The court oversees the distribution of the deceased person’s assets. The appointed personal representative manages the estate, pays debts, and distributes the assets according to intestate succession laws.
However, intestate succession laws don’t always work in ways that make sense to most people. Let’s break it down together.
Who Inherits First?
If you die without a will, the first people in line to inherit your estate are your immediate family members. If you’re married with children, your spouse and children will share your assets.
Your spouse typically receives a larger portion, but the specific division depends on the size of your estate and whether the children are from your current marriage or a previous one.
Surviving Spouse and Children
If a spouse and one child survive the deceased person, the spouse receives half of the real estate and half of the personal property. The child inherits the remaining half.
If there are two or more children, the surviving spouse receives one-third of the real estate, $60,000 of personal property, and one-third of the remaining personal property, with the remaining two-thirds being equally divided among the children.
No Surviving Children
If the deceased person has no surviving children but has a surviving spouse, the spouse inherits the first $100,000 of personal property plus one-half of the remaining personal property and one-half of the real estate.
The remaining half is distributed to the deceased’s parents or, if they are not alive, to the deceased’s siblings.
No Surviving Spouse
If there is no surviving spouse, the entire estate is distributed among the deceased’s children or their descendants. When there are no descendants, the estate goes to the deceased’s parents.
If the parents are not alive, the estate is distributed to the deceased’s siblings.
Other Relatives
If there are no immediate family members, the estate is distributed to more distant relatives, such as grandparents, aunts, uncles, and cousins, according to a specific hierarchy defined by the state.
When Do Heirs Inherit?
For an heir to inherit under intestate succession, they must survive the deceased person by at least 120 hours (five days). This requirement ensures clarity in the distribution process and prevents complications that might arise from simultaneous deaths.
What If There Are No Immediate Family Members?
If there are no surviving spouses or children, your estate will go to your next closest relatives. This could include your parents, siblings, or even nieces and nephews.
North Carolina law outlines a clear hierarchy of who inherits next, ensuring that your property stays within your family.
There are specific rules for certain situations. For example, if you have children from a previous relationship, they will still be entitled to a share of your estate. Additionally, if you own property jointly with someone else, such as a joint bank account or real estate, the rules for how that property is divided can vary.
Navigating intestate succession laws can be challenging, but knowing the basics helps you understand what to expect. If you have questions or need assistance, consulting with a probate attorney can provide clarity and help you manage the process effectively.
We Can Help
At Hopler, Wilms, and Hanna, we understand that dealing with the loss of a loved one is already difficult, and the complexities of probate and estate administration can add to the stress. Our experienced attorneys are here to guide you through every step of the process.
Understanding how intestate succession works in North Carolina can help you navigate the legal process if a loved one passes away without a will. If you have any questions or need assistance with estate administration, let us guide you through the specifics of your situation.
We work with you to ensure that your loved one’s estate is handled efficiently and according to North Carolina law. Whether you need assistance with probate court, managing the estate, or understanding your rights as an heir, we are here to help you manage these challenges with care and compassion.
Contact us today to learn more about how we can assist you during this difficult time.